Tesla’s 2019 Will Be Critical

It cannot be denied that Tesla had its own ups and downs this year. But despite the controversies, which mostly involved its own CEO Elon Musk, the automaker managed to remain on top of the competition. Apparently, 2019 will not be moonlight and roses for the company – it is expected to be critical for its survival, as reported by Business Insider.

Musk’s all-electric cars are expected to enter the brand new year with being able to produce and sell more vehicles than ever. In addition, the company is believed to be on its way to a half-million in vehicles by the end of the same year. It holds true that it is good news for the firm. Unfortunately, it always has the tradition to struggle significantly when it comes to its very own building-cars aspect.

Also, the CEO of Tesla is going to face potential twin headwinds in the upcoming year. First is the infamous economic slowdown in the United States. Second – and more importantly – is the very first stages of the 2020 national election. If the automaker is unable to move past beyond expectations and slips into a downturn, it will not really be able to dodge the market pain.

There’s good news on the horizon, though, especially since Tesla is all set to introduce the Model Y crossover SUV. Apart from it, the company is going to unleash some other new vehicles, including a rumored pickup truck.

In January, Tesla expects the Model 3 to add substantially to its 2018 delivery totals. 2017 saw 100,000 vehicles delivered and 2018 could more than double that total. But as soon as February enters, it could post its first six-month period in the black ever. Regardless of the bottom line, its topline revenue should continue to surge. For the full year of 2019, the company could bring in close to $30 billion.

Experts also believe that by March, Tesla would have a market mismatch in the US with its Model 3, a sedan in an SUV world. Fortunately, the Model Y will fix that. The company has also said it will pay off $920 million in convertible debt, due in September, with a mix of stock and cash. But shares need to be trading at around $360 per share for the stock deal to be appealing to bondholders.

By April, despite construction being started in late 2018, Tesla is going to find a way to borrow a few billion in order to complete the facility. It is worth noting that the automaker recently announced an upcoming factory based in Shanghai, China. It is expected to produce vehicles for the massive Chinese market.

It holds true that Tesla’s cash management was rather solid in 2018. But it does not mean that the company will be going any cheaper, particularly in 2019 – its year of imminent success. The only catch, however, is that the company has had a bad habit of keeping less money in the bank than it needs to run to the company for a full year. Hopefully, Musk and his team could do something about it.

If Tesla proves to be profit sustainable 2019, there is no doubt that the situation would change. Otherwise, a capital raise could be in order. Although it does not have to equity related, the company could possibly tap the debt markets.

Furthermore, everyone will agree that the company did not have that many vehicles to sell in the summer of 2018. This is particularly the case as soon as it struggled with Model 3 production. But summer of 2019 should be a different story, as the model’s production levels off and less-expensive trim levels hit the market. It could be the first serious summer selling season in automaker’s history.

Luis Aureliano is a business writer and financial analyst. With over 15 years of experience in global finance and an MBA in economics and management, Luis’s areas of expertise include business, marketing, communications, personal finance, macro economics, stocks and emerging markets.

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